Earnings call transcript: Thunderbird Entertainment Q2 2024 misses EPS expectations

Thunderbird Entertainment Group Inc. reported its second-quarter earnings for 2024, revealing a slight miss on earnings per share (EPS) expectations and a decline in its stock price following the announcement. The company posted an EPS of $0.01, falling short of the forecasted $0.03, while revenue reached $47.18 million, also underperforming the expected $54.97 million. This financial miss led to a 2.7% drop in Thunderbird’s stock price, closing at $1.85, down from $1.90. According to InvestingPro data, the company maintains strong financial health with an overall score of 3.09 (rated as "GREAT"), suggesting resilience despite the earnings miss.

Key Takeaways

• Thunderbird’s Q2 2024 EPS of $0.01 missed expectations by $0.02.
• Revenue for the quarter was $47.18 million, below the forecast.
• Stock price fell 2.7% post-earnings announcement.
• Year-to-date revenue showed a 19% increase year-over-year.
• Production service revenue surged by 42%.

Company Performance

Thunderbird Entertainment demonstrated solid year-over-year growth in several areas despite missing quarterly forecasts. The company reported a 6% increase in Q2 revenue and a 19% rise in year-to-date revenue. Production service revenue was particularly strong, growing by 42%, indicating robust demand for Thunderbird’s production capabilities. The gross margin declined slightly to 21.3% from 23.2% the previous year, reflecting cost pressures. InvestingPro analysis reveals the company’s impressive 5-year revenue CAGR of 23%, though weak gross profit margins remain a challenge. For deeper insights into Thunderbird’s financial performance and growth metrics, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Financial Highlights

• Revenue: $47.18 million, up 6% year-over-year.
• Year-to-date Revenue: $92.8 million, up 19% year-over-year.
• Net Income: $800,000, up 33% from the previous year.
• Adjusted EBITDA: $4.2 million, up 7.7%.
• Gross Margin: 21.3%, down from 23.2% the previous year.

Earnings vs. Forecast

Thunderbird’s EPS of $0.01 was below the forecast of $0.03, representing a 66.7% miss. Revenue of $47.18 million also fell short of the expected $54.97 million, a miss of approximately 14.2%. These results indicate a challenging quarter compared to market expectations.

Market Reaction

Following the earnings announcement, Thunderbird’s stock price experienced a 2.7% decline, closing at $1.85. This movement reflects investor disappointment with the earnings miss. The stock remains closer to its 52-week low of $1.55, indicating potential investor concerns about the company’s short-term performance. InvestingPro analysis suggests the stock is currently undervalued, with additional metrics showing a low P/E ratio relative to growth potential (PEG ratio of 0.11). Discover more undervalued opportunities at Investing.com’s Most Undervalued Stocks.

Outlook & Guidance

Looking ahead, Thunderbird aims to achieve a 20% revenue growth for fiscal year 2025 and over 10% adjusted EBITDA growth. The company is focused on expanding its transcillary business, increasing its scripted production mix, and maintaining disciplined cost management. These strategies are expected to capitalize on opportunities in content production and IP conversion. With an Altman Z-Score of 4.71 and a strong balance sheet showing more cash than debt, InvestingPro data indicates the company is well-positioned to execute its growth strategy. InvestingPro subscribers have access to 8 additional key insights about Thunderbird’s financial position and growth prospects.

Executive Commentary

Jennifer Twiner McCarron, CEO of Thunderbird Entertainment, emphasized the company’s proactive approach in navigating current market dynamics, stating, "We are actively monitoring this very fluid situation." She also reiterated Thunderbird’s long-term ambition: "Thunderbird’s goal is to become the next major global studio." CFO Simon Bodymore highlighted the company’s financial health, noting, "We continue to operate with a strong balance sheet that carries no corporate debt."

Risks and Challenges

• Market Disruption: The media industry is facing significant changes, particularly in streaming, which could impact Thunderbird’s partnerships and revenue streams.
• Cost Management: Declining gross margins indicate potential cost pressures that need addressing to maintain profitability.
• Competitive Landscape: With over 250 partnerships, maintaining competitive advantage in content quality and production reliability is essential.
• Economic Conditions: Broader economic pressures could affect consumer spending on entertainment, impacting Thunderbird’s revenue.
• Content Strategy: Balancing the mix of IP conversion and service production will be crucial for sustaining growth.

Thunderbird Entertainment’s Q2 2024 results reflect both the opportunities and challenges faced by media companies navigating a rapidly evolving industry landscape.

Full transcript - Thunderbird Entertainment Group Inc (TBRD) Q2 2025:

Call Moderator, Thunderbird Entertainment Group: Thank you for joining Thunderbird Entertainment Group’s fiscal twenty twenty five Q2 earnings call. Frank Alfano from Bristol Capital will read the forward looking statement disclaimer.

Call Introducer, Thunderbird Entertainment Group: Thank you for joining us. We are here to provide a corporate update and report on Thunderbird Entertainment Group’s Q2 twenty twenty five results for the three months ended 12/31/2024. Speaking on today’s call are Ms. Jennifer Twiner McCarran, CEO and Chair of Thunderbird Board and Mr. Simon Bodymore, Thunderbird’s CFO.

Mr. Hunter McCarran will provide a strategic overview of Thunderbird Entertainment Group and Mr. Bodymore will review the company’s financial Q2 twenty twenty five. Following the corporate update and financial review, the call will be open for a Q and A session. And alternatively, if you have any questions, you could call 080555 extension 2 or e mail investorsthunderbird.

Tv and the company will follow-up directly after the call. At this time, all lines have been placed on mute to prevent any background noise. I’d like to remind everyone that certain statements made on today’s call contain forward looking information for purposes of applicable securities laws. Forward looking statements and information discussed on this conference call include, but are not limited to, statements regarding the implementation and effect of tariffs on the film and television industry anticipated adjusted EBITDA growth, sustained growth and the ability to add more scripted content and grow our production slate consumer product and ancillary licensing opportunities Mermicorno, Starfall, Rocket Saves the Day, Day You Begin and Superteam Canada resonating with North American audiences, the production and success of Sideline two, the green light and attachment of GPM on Obey Thunderbird’s ability to navigate industry headwinds, produce and sell sell more content and execute on growth strategies, changes in total revenue and timing for filming new productions. Forward looking statements are based on estimates and assumptions that while considered reasonable are subject to known and unknown risks, uncertainties and other factors which are set out in the company’s most recent MD and A and other public documents filed under the company’s profile on SEDAR.

Although the company believes that the assumptions and factors used in preparing these forward looking statements are reasonable, Undue reliance should not be placed on these statements, which only apply as of today’s date, and no assurance can be given that such events will occur in the disclosed time frames or at all. Except where required by law, the company disclaims any intention or obligation to update or revise any forward looking statement, whether as a result of new information, future events or otherwise. The conference call is being webcast live and the archive will be available on the company’s website at www.thunderbird.tv following today’s call. Please note that Thunderbird reports in Canadian dollars unless otherwise stated. Ms.

Twiner McCarron will now provide the corporate update.

Jennifer Twiner McCarron, CEO and Chair, Thunderbird Entertainment Group: Thank you so much, Frank. My name is Jennifer Twiner McCarron, and I’m the CEO and Chair of Thunderbird Entertainment Group. On behalf of the company, I’d like to thank you for joining today’s call to discuss Thunderbird’s fiscal twenty twenty five Q2 results. Thunderbird’s CFO, Simon Bodymore, is with me, and we appreciate you taking the time to hear the company’s earnings update. Once Simon and I are finished, we will happily answer any and all of your questions and provide clarity where needed.

I want to start by addressing the tariff situation as I recognize this issue is dominating the news cycle, changing daily and causing some anxiety for a lot of people. We are actively monitoring this very fluid situation. And as it stands, audiovisual content, which includes TV shows, feature films, and digital programs, is currently considered a service rather than a good. This means that tariffs at this time do not directly apply to domestic productions and foreign location and service productions, as well as the Canadian sale of TV projects, feature films or other produced content to U. S.-based buyers.

That being said, we acknowledge that this is a very dynamic situation and affects both sides of the border. At Thunderbird, our focus is on what we can control. This is creating premium content that results in plenty of repeat business for both IP original work and service work, which is anchored by what’s selling in the marketplace. And I’m not going to lie, this current political drama is proving to be very good for our IP show with Will Arnett featuring the all star B Team Super Team Canada. We will continue to monitor and update as events unfold.

Okay, so now on to Q2. Q2 demonstrates Thunderbird’s continued progress and how the company continues to make positive strides forward. We are very pleased to share that we remain in line and on track with the guidance we provided during our fiscal year end call for 2024, which was a 20% increase in revenue year over year and a 10% increase in adjusted EBITDA year over year. This progress reflects the strength of the company’s growth strategy and its ability to adapt and be nimble in an ever changing marketplace. As many of you are aware, Thunderbird’s goal is to become the next major global studio and we believe we are still well on the way to achieving it with more opportunity in this time of disruption presenting itself to us.

As most of you know, we have over two fifty partnerships with major streamers and broadcasters such as Netflix (NASDAQ:NFLX), Max, Apple (NASDAQ:AAPL), Disney (NYSE:DIS), USA Network, NBCUniversal, BBC, France TV and many more. Both our service and IP production slates are growing. And we are starting to add more scripted productions into the mix, such as Sideline to Qb and Me. This Great Pacific Media production was based on a Wattpad novel. After its release on Tubi, it was the number one movie in Canada and The USA, drawing the largest number of viewers of any title on Tubi in its first seven days.

In early December, it also landed at number five on Variety’s Streaming Originals chart for the week. And talk about a touchdown, the Wattpad sensation is officially getting a sequel, once again starring Noah Beck and Sienna Agudong. Congratulations Great Pacific Media and our partners on the success of this story and production. It was also recently announced that Great Pacific will be providing production services for Obey, a high concept horror film written by Brandon and Curtis Bertel. Deadline shared exclusive details about what promises to be a thriller, so stay tuned.

We’re also increasing our footprint in transcillary business like distribution, games, consumer products and toys. Productions like Super Team Canada, which was a top TV pick for 25 in The Globe and Mail, Rocket Saves the Day, and The Day You Begin are company owned IP and represent additional opportunities to monetize. The highly anticipated Atomic Original Mermicorno Starfall also represents such opportunities. With recent launches in The U. S, LatAm, and Canada, and upcoming U.

K. Debut on March 3, the show is also attracting more licensees beyond toys to include publishing, bedding, footwear, accessories, and personal care to name a few, which will be announced in the coming months. I often describe Thunderbirds as an IP conversion platform with an incredible service production link that provides great cash flow for the company to reinvest in its long term growth value and prominence. Our work is highly sought after as evidenced by the global brands that we handle and deliver on like Donald Duck, one hundred and one Dalmatians, Spiderman, Trolls, My Little Pony, Cocomelon, Ironman, the list goes on. Good begets good, great begets great, and excellent begets excellence.

When you do an amazing job handling service work, the natural result is that it becomes much easier to turn around and sell your own ideas and IP. Furthermore, with the recent increases to the Film Incentive BC Tax Credit, which supports Canadian content productions, and the Production Services Tax Credit that provides a tax incentive for international projects made in BC, there’s even a greater reason for US productions to turn to Canadian companies with global appeal like Thunderbird. The dollar also helps. Recently, teams from Thunderbird and Atomic attended key industry events, including Prime Time in Ottawa, Kids Screen Summit in San Diego, and Real Screen Summit in Miami. So many of these conversations we have at these events, whether exciting prospective partners or trusted long term partners, reflect Thunderbird’s reputation for being a reliable and consistent creator of quality content.

When Thunderbird comes to the table and they know that not only are we bringing them a great idea, but that we’re going to execute on it flawlessly, it’s very compelling. Clearly, it’s a time of disruption in the media industry, but with that does come great opportunity and the health of Thunderbird, we are set to capitalize on this. From a financial and content production standpoint, we’re really strong. We’ve proven our ability to navigate industry headwinds. Everyone within our industry can attest to the challenges of the past few years budgets changing, teams being scaled back, and overall strategy shifting.

And Thunderbird has managed to stay steady, more than steady, very healthy. This is something we’re incredibly proud of. And this solid footing further positions us to capitalize on opportunities as they arrive. And we are all over them. In addition, the recent successes by streamers like Disney and Netflix, both of which experienced gains in their latest earnings report, also lead to opportunity.

Last month, Netflix shares soared with the news of its Q4 results, which announced that the streamer had surpassed 300,000,000 paid memberships and added a record 19,000,000 subscribers during the quarter. When Netflix inevitably seeks a partner to produce quality content for its expanding audiences, they know Thunderbird can deliver what they need to attract and maintain that key co viewing audience. In Nelson’s recently released Most Watched Streamer Titles of 2024 report, animated and kids content are mainstays. Bluey on Disney plus topped streaming programs with fifty five point six billion minutes viewed. Futurama and Gabby’s Dollhouse are in the top 10 on the originals list.

And under movies, the top viewed films include Moana, Super Mario Brothers movie, Trolls, Band Together, Minions, Encanto, Frozen, PAW Patrol, and the movie Inside Out and Boss Baby. Speaking of sticky content that attracts the co viewing audience, factual content is equally engaging and the co viewing audience is essentially families gathering together to watch content. Because when that happens, people are less likely to subscribe and unsubscribe. Not too many shows can boost that they have reached the 200 episode milestone in Factual. And we are so proud to be weeks away from celebrating Highway three Health’s two hundredth episode, which will air on March 4.

Television shows are never guaranteed success. Most are likely to get an entire season. A good show tends to run for a few seasons and hit the elusive one hundredth episode mark. Highway Through Hell is joining the two hundred plus club. This is an incredible achievement and underpins Thunderbird’s reputation for developing quality content.

When you look at other series that have achieved this milestone, Highway three Hell is in really good company. For example, The Office had two zero one episodes. Friends had two thirty six episodes. More specifically, factual reality series that have hit over 200 episodes include Ghost Hunters with two thirty, Mythbusters with two ninety six, keeping up with their Kardashians at over two eighty. And we’re so, so proud of the Highway through Hell production team on this massive accomplishment.

As we look ahead to the future of Thunderbird, we strive to achieve more exciting milestones. And Highway through Hell has become a format show. It’s populating in other forms. I’m confident that we will because when we bring the right people together to create quality content, we have the potential to resonate with global audiences. At this time, I’ll now pass things on to Simon to go over the numbers.

Simon Bodymore, CFO, Thunderbird Entertainment Group: Thanks, Jen, and hi, everyone. I’ll spend some time now walking through the key highlights of our second quarter. Revenue for the second quarter was $47,200,000 compared to $44,500,000 for the same period last year, representing a 6% increase. Year to date, this brings up total revenue to $92,800,000 which is a 19% increase over the $78,100,000 recorded for the first six months of last fiscal year. These strong year on year results have been driven to date by production service engagements, while we experienced 42% growth during the current quarter with revenues from this source totaling $44,300,000 That’s $13,200,000 higher than in the second quarter of last year.

Dollars ’5 point ’1 million of this increase came from our animation division, representing a 16% growth rate, while the other $8,100,000 of growth came from scripted and unscripted production services. Additionally, we haven’t performed a large amount of production services engagements outside of our kids and family division. This year, however, we were able to work on the hit TV movie, Sideline, the QB and Me and Extracted, a reality TV series currently being aired on Fox in The U. S. And CTV in Canada.

Licensing and distribution revenue decreased by $10,500,000 this quarter compared to the same period last year. This represents a 79% decrease, which is attributed to the timing of the airing of several unscripted shows that we’ve produced for the current year’s release cycle. Revenue for the current quarter came from distribution contracts for our existing shows Reginald the Vampire, Mittens and Pants and Boosling. In the comparative period last year, revenue was recognized from the delivery and initial airing of Reginald the Vampire season two and Highway Through Hell season 12. Both Highway Through Hell season 13 and Rocky Mountain Wreckers season one premiered in the early part of calendar twenty twenty five and will contribute to revenue during our third quarter, as will Mermicorno Starfall, which made its debut in The U.

S. At the January. Our gross margin for the quarter was 21.3% compared to 23.2% in the same period last year. This is in line with our expectations and is primarily the result of the increase in our scripted and unscripted production services business, which as we’ve mentioned on previous calls, attracts lower gross margins than animation production services and unscripted shows where we own the IP. For the six months ended December 31, our gross margin is 20.5% compared to 22.7% for the same period last year.

For the second quarter, we recorded our fifth straight quarter of positive earnings with net income of $800,000 This compares to a profit of $600,000 for the same period last year. Over the past year, management has worked hard to streamline costs and increase efficiencies wherever possible with the intent of returning the company to profitability on a consistent basis. We’re pleased with our continued progress on this front. We continue to maintain a disciplined approach to managing costs as we move through 2025 and aim to implement further savings in discretionary areas wherever possible. Second quarter adjusted EBITDA increased to $4,200,000 compared to $3,900,000 in the same period last year.

This is a result of our lower cost base and growth in revenues year on year. For the six month period, adjusted EBITDA increased 30% to $8,300,000 from $6,400,000 As we move forward, we continue to be optimistic and see opportunities to maintain top line growth throughout the year. There continues to be headwinds in the market, but we have good visibility throughout 2025 and into 2026. Your ongoing production service contracts as well as with many of our ongoing unscripted titles, which have already received commitment for future series to be produced. In addition, we expect to begin to see the results of the investments we’ve made during the last eighteen months in a couple of our own IP animated shows, with Mermicorno South all airing in January already this year and Super Steam Canada expected to air during the latter part of fiscal twenty twenty five.

At this time, we are reaffirming our previously announced 2025 revenue and adjusted EBITDA targets and are targeting revenue growth of 20% and adjusted EBITDA growth of over 10%. As previously discussed, our adjusted EBITDA is expected to grow more slowly than revenue in the upcoming year as a result of the mix of work being undertaken, especially on the non animation side of the business. While that part of the business is traditionally focused on owned IP creation, we’ve taken on additional production services work, which generally attracts a lower margin because of the current market headwinds. We’ll consider taking on more of this work where it makes sense as it provides the opportunity to highlight the adaptability of our teams and the high quality work we can produce. It also provides us with the opportunity to meet and work with new customers.

We continue to operate with a strong balance sheet that carries new corporate debt, providing the financial flexibility to pursue growth opportunities as they present themselves. Coupled with disciplined financial oversight, we believe we’re well positioned to succeed in an evolving market landscape. And with that, I’ll pass back over to Jen to continue with our corporate update.

Jennifer Twiner McCarron, CEO and Chair, Thunderbird Entertainment Group: Thanks so much, Simon. I’ll now provide a corporate update for the first quarter. In Q2, the company had 21 programs in various stages of production and was working with 18 clients. Of the 21 programs in production, seven were Thunderbird IP and 14 were service productions. Thunderbird Kids and Family producing Under Atomic was in production on 15 programs and working for 11 clients, including Superteam Canada, Favela Media’s Crave, The Day He Begins for PBS Kids, Marvel’s Iron Man and his awesome friends for Disney Junior, and Marvel’s Spider and his amazing friends, Spider Man that is seasons three and four for Disney Junior among others.

And atomic original Mermicorno Starfall for Warner Brothers. Thunderbird Unscripted, producing under GPM, was in production on six unscripted series in Q2, including Timber Titans season two for USA Network Canada, Highway Through Hell seasons thirteen and fourteen for USA Network Canada, Rocky Mount Rutgers season one for The Weather Channel US, USA Network Canada, Extracted season one for B17 Entertainment, FOX Alternative Entertainment and Balboa Productions and Wild Rose Vette Season two for APTN. For scripted productions during the quarter, the company had 20 scripted projects in active development, of which four are in paid network development, which means the prospective buyer is paying for the development of the series with the hopes of going to production. Additional gender burn milestones and achievements include Atomic produced Lego Pixar Bricktoons just recently last week, winning a twenty twenty five kids screen award for the best animated series in kids programming category. Atomic also produced Lego Star Wars Rebuild the Galaxy being nominated for an Annie award for best TV media limited series.

Tomac also produced Princess Power, receiving a nomination for the GLAAD Media Award in the outstanding children’s programming category. And Great Pacific Media produced a podcast, Dead Man’s Volcanic Gold, taking home a Gold twenty twenty four signal award for best history series for the second year in a row. In closing, we recognize that they continue to be industry headwinds and that even greater global situations that may impact all of us directly or indirectly. We’re not alone in this position. But amidst this uncertainty, we focus on what we are certain of and what we can control.

As demonstrated by our earnings report, Thunderbird continues to drive forward and achieve continued profitability. For these reasons and more, we are confident that Thunderbird will nimbly navigate any situation that should arise and continue on our path to becoming the next major global studio. Content is here to stay. It will always remain a happy escape for everyone and we are the best people to provide that. This concludes the formal part of our corporate update and Simon and I will now gladly take all of your questions.

Call Moderator, Thunderbird Entertainment Group: This concludes our call today. If you have any questions, please call 080555 or email investorsthunderbird. Tv. Thank you for joining us today.

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